![\"\"](\"https:\/\/blogs.bath.ac.uk\/iprblog\/wp-content\/uploads\/sites\/115\/2024\/09\/Key-findings.png\")
<\/p>\n<\/p>\n
Dr Rita Griffiths<\/a> is a Research Fellow at the University of Bath Institute for Policy Research (IPR). Dr Marsha Wood<\/a> is a Research Associate at the Institute for Policy Research. This blog post is part of their work on the report 'Cliff edges and precipitous inclines: The interaction between Universal Credit and additional means-tested help for working claimants'<\/a> which explores the interaction between Universal Credit (UC), earnings, \u2018passported\u2019 benefits and other means-tested help for working claimants. The research was funded by abrdn Financial Fairness Trust<\/a>.<\/em><\/p>\n How much working people get to keep from gross earnings, and what they have left to spend on essential living costs once HMRC has deducted tax and national insurance, is known to influence the incentive to work and earn more, as well as people\u2019s sense of fairness and financial well-being.\u00a0 So how would you feel if, having paid your tax and NI, a further 55% of income was deducted from every additional \u00a3 of net earnings? Would it make you want to work longer or earn more? \u00a055% is the proportion of Universal Credit that is lost, or \u2018tapered\u2019 away from entitlement, and that is intended to motivate claimants to earn more. For low-income people who may also qualify for additional help with living costs \u2013 such as reductions in council tax, utility bills, prescription charges or free school meals, for example - the trade-off between earning more and losing entitlement to that help can be starker still. Known as \u2018cliff edges\u2019, the extra take home pay may be worth less than the value of entitlements lost.<\/p>\n Drawing on the findings of a qualitative research study exploring the experience of working claimants on Universal Credit (UC), we explored the interaction between earnings, \u2018passported\u2019 benefits and other means-tested help. These are income-based forms of financial and in-kind help with essential living costs that are administered and assessed separately from the main working-age benefits. This additional help is of increasing interest to politicians and policymakers due to the vital role the different schemes play in supporting low-income households. Also important to understand is the impact these schemes can have on work incentives when the help is withdrawn as earnings rise.<\/p>\n While all participants had levels of earnings low enough to entitle them to UC, only in rare instances (such as the previous government\u2019s Cost of Living payments) did UC receipt, of itself, automatically qualify them for additional help. Not only were application processes typically onerous and time-consuming, but many working claimants were ineligible for the help due to the very low earnings thresholds which applied to most of the schemes. Others had variable earnings which meant they dipped in and out of eligibility from one month to the next. Whether people know about, were entitled to, able to apply for and successfully awarded any help was a hit-and-miss lottery of postcodes, personal circumstances and happenchance. The schemes are also burdensome and costly for administering authorities to deliver, particularly when claimants\u2019 income levels frequently change.<\/p>\n A particular concern was the sudden withdrawal of much relied-on sources of help when income rose above a certain level, leaving some people financially worse off. This is what happened to Sarah. When Sarah returned to work after maternity leave, she simultaneously lost entitlement to council tax reduction, free school meals, a school uniform grant and Healthy Start vouchers. As she explained:<\/p>\n \u201cLast year I decided to go back to work and it just messed up everything \u2026 I don\u2019t want to be on benefits, I do want to be working and off them... I had three letters from the council all at once, one was saying my eldest was no longer entitled to free school meals. Then the next letter said that we no longer get discount for our council tax. And then the third letter, they do a uniform grant every year, then they said that I earned too much to receive that. Oh, and then there was a fourth one saying that I no longer get the Healthy Start vouchers. It was absolutely ridiculous \u2026 So it\u2019s not like I had any extra money from working<\/em>.\u201d<\/p>\n<\/blockquote>\n Although both Sarah and her husband were working, the cumulative effect of losing these different sources of help all at once meant that the family was worse off when she was in work than when she was not. Reluctantly, she gave up her job.<\/p>\n \u201cWhen I put all that together\u201d <\/em>she said, \u201cit worked out that we\u2019d have more outgoings than we do incoming, with me being in work... when I was working, it just wasn\u2019t doable \u2026 It just works out better if I\u2019m not in work, for the minute anyway ... So I\u2019ve just decided \u2026 I\u2019m going to wait until my little one\u2019s in full-time [school].<\/em>\u201d<\/p>\n<\/blockquote>\n Other difficulties arose for people whose monthly earnings varied. Automated linkages between UC and some council tax reduction schemes meant that eligibility for help, and liability for council tax, therefore, could fluctuate from one month to the next. As Zoe explained:<\/p>\n \u201cIt literally fluctuates every single month \u2026\u00a0 My wages are pretty steady \u2026 but it only takes an hour or two\u2019s overtime for me to lose it and they have to readjust... If I didn\u2019t work at all, I would have full council tax [support], but because I work \u2026 it changes each month.\u201d<\/em><\/p>\n<\/blockquote>\n Even a small increase or decrease in earnings of just a few pounds could generate a new council tax demand, statement and monthly payment regime. Finding the money to pay council tax was hard enough, but a liability that varied each month was harder still to keep on top of. \u00a0She said,<\/p>\n \u201cI can genuinely tell you, I never know from one month to the next what I\u2019m paying! I just get a letter through the door, and I ring them up and I say, how much do I owe? \u2026 It\u2019s really, really confusing and \u2026 really difficult to budget \u2026 It literally fluctuates every single month.<\/em>\u201d<\/p>\n<\/blockquote>\n The different entitlement rules and income thresholds of the disparate schemes also made it hard for claimants to reliably estimate the financial impact that working longer and earning more would have.\u00a0 Evidence from the research suggests that the uncertainty and potential loss of household income caused by \u2018cliff edges\u2019 as earnings rose, discouraged some people from working longer hours or earning more.<\/p>\n With little strategic overview to date in terms of the design and role of the various schemes, our main recommendation is for a comprehensive review to be conducted of the additional means-tested benefits, entitlements and discounts that sit outside Universal Credit, exploring their interaction with earnings and their effects on work incentives and employment behaviours. This should be done as part of the review into UC announced in the Labour Party manifesto. A key priority would be to increase and standardise the low and variable earning thresholds applying to the disparate schemes. To remove the disincentive effects of \u2018cliff edges\u2019 on work decisions, fairer and more consistent methods are also needed for withdrawing support as earnings rise. Increasing take-up through smarter signposting and greater automation in the administration and payment of entitlements, is another priority. Without such improvements, the risk is that levels of household income in working families will fall further, countering UC\u2019s pledge to \u2018make work pay\u2019 and potentially compromising the Government\u2019s new child poverty strategy.<\/p>\n All articles posted on this blog give the views of the author(s), and not the position of the IPR, nor of the University of Bath.<\/em><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":" Dr Rita Griffiths is a Research Fellow at the University of Bath Institute for Policy Research (IPR). Dr Marsha Wood is a Research Associate at the Institute for Policy Research. This blog post is part of their work on the...<\/p>\n","protected":false},"author":1742,"featured_media":2452,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[106,108,112,116,124,129,138,131,149],"tags":[],"class_list":["post-2449","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-basic-income","category-culture-and-policy","category-economics","category-evidence-and-policymaking","category-public-services","category-uk-politics","category-universal-credit","category-welfare-and-social-security","category-young-people"],"acf":[],"jetpack_featured_media_url":"https:\/\/blogs.bath.ac.uk\/iprblog\/wp-content\/uploads\/sites\/115\/2024\/09\/Cliff-edges-and-precipitous-inclines.png","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/blogs.bath.ac.uk\/iprblog\/wp-json\/wp\/v2\/posts\/2449","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.bath.ac.uk\/iprblog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.bath.ac.uk\/iprblog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.bath.ac.uk\/iprblog\/wp-json\/wp\/v2\/users\/1742"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.bath.ac.uk\/iprblog\/wp-json\/wp\/v2\/comments?post=2449"}],"version-history":[{"count":0,"href":"https:\/\/blogs.bath.ac.uk\/iprblog\/wp-json\/wp\/v2\/posts\/2449\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blogs.bath.ac.uk\/iprblog\/wp-json\/wp\/v2\/media\/2452"}],"wp:attachment":[{"href":"https:\/\/blogs.bath.ac.uk\/iprblog\/wp-json\/wp\/v2\/media?parent=2449"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.bath.ac.uk\/iprblog\/wp-json\/wp\/v2\/categories?post=2449"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.bath.ac.uk\/iprblog\/wp-json\/wp\/v2\/tags?post=2449"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}New research into working claimants on UC<\/strong><\/h3>\n
What the research found<\/strong><\/h3>\n
\n
\n
\n
\n
What can be done?<\/strong><\/h3>\n
![\"\"](\"https:\/\/blogs.bath.ac.uk\/iprblog\/wp-content\/uploads\/sites\/115\/2024\/09\/Key-recommendations.png\")
<\/p>\n\n